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Correction to This Article
In some early April 7 editions, an article incorrectly referred to Matteo Fontana, general manager in a division of the office of Federal Student Aid, as a presidential appointee. Fontana was placed on paid administrative leave after officials learned Thursday that he was a shareholder in 2003 in the parent company of Student Loan XPress.

Student Loan Official Suspended

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By Amit R. Paley
Washington Post Staff Writer
Saturday, April 7, 2007

The U.S. Education Department yesterday suspended a senior agency official who held more than $100,000 of stock in a student loan company at the same time he helped oversee the lending industry.

Matteo Fontana, general manager in a division of the office of Federal Student Aid, was placed on paid administrative leave after officials learned Thursday that he was a shareholder in 2003 in the parent company of Student Loan XPress.

Education Secretary Margaret Spellings also asked yesterday for the financial aid director at the University of Texas at Austin to resign from a committee created by Congress that advises the secretary on student aid policy. The official, Lawrence Burt, was one of three university financial aid administrators who also owned shares in the loan company and have been suspended.

The developments are the latest fallout from an expanding nationwide investigation of the $85 billion student loan industry. Congressional Democrats and state law enforcement officials have focused scrutiny on the often-hidden financial relationships among lending companies, government officials and university administrators.

Senior Democratic lawmakers have asked the Education Department to provide documents on relationships between department officials and student lending companies. Rep. George Miller (D-Calif.), chairman of the House Education Committee, said Congress would investigate to "make sure that taxpayers, students and their families are being served in their best interests by the Department of Education and not through cronyism."

Sen. Edward M. Kennedy (D-Mass.), chairman of the Senate Education Committee, said in a statement, "We will strengthen our laws to prevent such actions and throw the money changers out of the temple of higher education."

Fontana did not return phone calls seeking comment.

He oversaw the massive database that contains confidential information on student borrowers and, in April 2005, became general manager of Financial Partners Services, which works with and oversees student loan companies.


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